Glucocorticoids are widely used for treatment of many diseases such as rheumatoid arthritis, pulmonary disease, and in organ transplant patients to prevent rejection. However, glucocorticoids have detrimental effects on bone, resulting in bone fractures in 50% of affected patients. The mechanism of bone los and the metabolic changes by which glucocorticoids induce the negative bone balance are not well understood. In patients with glucocorticoid-induced osteoporosis, increased bone marrow adipose tissue correlates with decreased trabecular bone volume. These observations suggest that glucocorticoids can direct bone marrow stromal stem cells to differentiate towards lineages other than the osteoblast phenotype. It has been shown recently that the glucocorticoid receptor interacts with Smad3 and inhibits TGF-beta signaling. Therefore, it is hypothesized that the glucocorticoid receptor/Smad3 interaction inhibits TGF-beta induced osteoblast differentiation and bone formation. The current proposal is intended to investigated how and when TGF-beta signaling is blocked, and what the consequences are of this interaction on osteoblast development. The objectives of this proposal are to: I. Examine the effect of glucocorticoids on TGF-beta signaling pathway in osteoblasts. The effect of glucocorticoids on TGF-beta-induced Smad3 phosphorylation, nuclear translocation, DNA binding and co-activator- Smad3 interaction will be determined. II. Determine the effect of glucocorticoids on TGF-beta-induced osteoblast differentiation marker gene expression. The expression on ALP, OPN, Cbfa1/oSF2, and type I collagen after treatment of human bone marrow stromal cells with TGF-beta and glucocorticoids will be determined by Northern analysis.